​Credit Card Debt
There's no denying that credit card debt can be a major burden. But it's important to remember that it's not always as bad as it seems.
​In fact, there are ways to manage credit card debt so that it doesn't have such a negative impact on your life. With the right approach, you can get your debt under control and even start to improve your financial situation.
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Types of Credit Card
Credit Cards
Standard credit cards are the most common type of credit card. They’re issued by banks, and you have to apply either online or in-branch to get one.
You’ll have a credit card limit, which is the maximum you’re allowed to spend on the card. Spending above this means you may have to pay charges on the card, and unless you pay your balance off in full, you’ll be charged interest on what you’ve borrowed every month.
Debit Card
Debit cards are different to credit cards in the sense that you can only draw out money you’ve already got in your account, rather than borrowing.
If you try to draw out money that you haven’t got, your card may be declined, or you might go into your overdraft facility, this could also accrue charges.
Store Cards
Store cards allow you to buy items on credit from a retailer, and work similarly to credit cards.
Anything you spend on your store card might begin to charge interest if you don’t pay it back within a certain timeframe.
​What happens if I don’t pay my credit card?
If you don’t pay the minimum payment on your credit card account, it will go into arrears. If this happens:
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Your lender will contact you to demand the missing payment
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If you don’t make the payments they ask for, the account will default and in turn will be recorded on your credit file
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And if you still don’t pay, further action may be taken, such as employing debt collection agents to recover the money you owe them
How do I pay off my credit card debt?
There are ways you can manage your credit card debt and repay what you owe:
01
Start by understanding your finances, so you know what you can afford to pay each month. Work out your budget by listing your income and spending (without using further credit) and turn this into a monthly plan you can follow.
03
Stop using your credit card, even if this is just for a short time. It’s much harder to pay off if the amount you owe keeps growing.
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05
Contact National Debt Advice if you’re not sure what to do. We’re here to help you out with your budget, advise you about different solutions (including debt consolidation) and set up a repayment plan, if that’s the right option for you.
02
Use this budget to set aside an amount to repay your credit cards, or ideally to save up for an emergency fund. It can help to transfer this amount to a separate bank account.
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04
Make sure you’re on top of your ‘priority bills’. These include council tax and any fines you might have. If you fall behind with them, you're at risk of visits from enforcement agents.
